Tim Phillips, the president of Americans for Prosperity, has a simple message for the Republicans in charge of Congress: Don't let down conservatives who elected you to cut spending and regulation, or your time in the driver's seat might be limited.

For Phillips, the GOP majority's biggest test is to pass a budget that meets conservative muster.

Phillips's opinion is not one to be taken lightly. Over the past few years, Americans for Prosperity has become one of the biggest conservative forces in the country. The non-profit group, part of a network of organizations connected to the Koch brothers, reportedly spent at least $125 million during the 2014 elections. A large chunk of that went toward early TV ads on Obamacare and other issues that set the tone of a long election year for Democrats and helped Republicans take back the Senate. AFP and its millions of volunteers also are deeply involved in state and local politics around the country, rivaling the reach of political party organizations.

Phillips sat down with National Journal to discuss his group's policy goals for the new GOP Congress and state legislatures, whether it plans to reprise its big-spending 2014 strategy against more Democratic senators (including its chief antagonist, Harry Reid), and what role the organization hopes to play in the Republican presidential primary. Here is the conversation, lightly edited for length and clarity.

Tim Phillips: Continuing the effort to roll back Obamacare. Not just asking for votes for overall repeal, but individual efforts—for example, ending the medical device tax and the penalty on the 40-hour work week. Second is on the energy front. We have a pipeline through the nation's midsection, and it's a political winner not for the environmental left but for the economic freedom side.

The third one is the budget, and there, I think we find the true test for the Republican majority in both chambers. What AFP is calling for is a budget that genuinely reforms Medicare, that block grants Medicaid to the states, and that genuinely caps discretionary spending at sequester-level numbers. That's going to be a huge challenge for them. They failed miserably the last time they had the Congress, and they've been given a second chance in a relatively short period of time.

A lot of conservatives have not enjoyed watching the new Congress at work. Do you think things have been going generally well so far, or has it been disappointing after winning these majorities?

We try to take the long view. So it's kind of tough to pass judgment in two months. They've had bumpy moments obviously, but they've done good things. But the biggest test lies ahead in the budget. The budget has the potential to blow their majority up.

Can you elaborate on that?

I think the American people could look at them and say, these guys said they'd reform government, make government not as big, and look at what they're doing. They're still growing government. And so I think the question is will they really scale back government spending and the size of government? Will they really make their rhetoric reality?

That said, there's still a Democratic president who can block conservative legislation in Congress. So what are some of the big goals in the states this year for your group, which has its roots in state government and policy?

As frustrating as policy battles have been at the federal level, there is a once-in-a-generation renaissance of economic freedom policies being passed at the state level. We've certainly been a key part of that. Republicans control 68 of 98 partisan legislative chambers. They have the governor, state House, and state Senate in 23 states. That means they have enormous opportunity, and to their credit, I would argue in '11, '12, and '13, they took full advantage.

While we're still seeing significant victories, like Gov. [Doug] Ducey's cutting-edge budget in Arizona and Gov. [Scott] Walker signing right-to-work in Wisconsin last week, we're having to oppose a lot of Republican initiatives at the state level right now. There's gas tax increases in Georgia, South Carolina, Nebraska, Iowa; there's potential Medicaid expansion we're really battling in Tennessee and Florida and Montana. We are seeing some Republicans who've had power for a few years doing some things that we've had to oppose.

Two states in particular seem like notable opportunities for AFP this year. In Illinois, Gov. Bruce Rauner is well-liked by your group and is pushing major changes, and in Nevada, where AFP is very active, Republicans hold the reins of state government after a landslide in 2014. What are you seeing and hoping for in those states?

Nevada is perplexing. Gov. [Brian] Sandoval and some in the legislature have chosen, for whatever reason, to go after bigger-government policies. They're going after tax increases and more spending. We're opposing it, and it could harm Republicans in that state for a long time. They finally get a majority and what do they do with it?

In Illinois, Gov. Rauner may become one of the bolder governors in the country. He really ran on an unabashed free-market agenda. He has the opportunity to be the next Scott Walker—not presidentially, but from the standpoint of policy victories in a blue state.

That's a very blue state. How can he find success?

One thing we've found in some of these blue states is having political leadership that will go big and go fast. That seems to be what Gov. Rauner is doing in Illinois.

Looking back at last year's Senate races, do you think AFP's decision to go really big, really early in defining some Democratic senators with TV ads was ultimately responsible for those incumbents losing and Republicans winning back the Senate?

A lot of times, senators vote figuring that by the time two or three years go by, the public will forget and they'll be able to skate away from their record. On Obamacare, those decisive votes were in 2009 and 2010, and yet these incumbents in 2014 were held accountable on that issue. Hopefully, that will hang in the air for incumbents of both parties, that time is not a salve and you're going to be held accountable.

Do you plan to reboot that strategy for 2015 and 2016?

We'll make those decisions down the road. I could tell you, but I'd have to kill you!

Sen. Harry Reid, as much as anyone, really singled out Americans for Prosperity and the Kochs in 2013 and 2014. Do you have any particular plans to single him out ahead of his reelection?

AFP has had an aggressive chapter in Nevada now since early 2010, involved in issues and holding legislative leaders accountable. I suspect we'll continue doing that in Nevada, and I'll leave it at that. It'll be interesting to see if he—well, I'll leave it at that.

Also on the subject of driving the political conversation, there's going to be a big conversation among conservatives over the next year about the Republican presidential nominee. What role if any does AFP plan to play?

This is the deepest, most accomplished field of Republicans seeking the nomination since, I believe, 1980. These are some accomplished governors and senators and private-sector folks. AFP has not gotten involved in federal-level primaries for the most part, and we're always careful not to close off options, but there's no plan right now to get involved in any way in the primaries. We do hope two things happen though. First, that there's a really healthy debate about how to get the economy really moving. And secondly, we want to work to see as many candidates as possible take specific issue stands on economic issues. Not just have a five- or eight-minute stump speech, but to get specific.

I'll give you an example. It was encouraging to see Ted Cruz at the Iowa Ag Summit stand up and say renewable fuel standards are wrong. Good for him. Gov. [Jeb] Bush did a lighter version of that. We hope to see more of these candidates tell us where they are on the Farm Bill, and as president what will they do about a Farm Bill. On tax reform, let's be specific and not just say "I want flatter, lower rates." We're going to be pushing these candidates to get as specific as possible.

And by the way, we're not endorsing Ted Cruz or anyone. That's just one example that happened recently. And there's another example, of Gov. Walker signing right-to-work.

Yet you were probably disappointed by what he said about renewable fuel standards.

I was. But again, I don't want to single him out because he signed right-to-work this past week. That's why I'm saying it's one of the most accomplished fields we've had. Look at Marco Rubio, in 2011 and 2012, he has over a 90 percent AFP voting record. Rand Paul as well. So I want to be very careful, I'm not trying to single anybody out.

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